The recent announcement of Zillow’s “Coming Soon” feature has reignited passions surrounding pre-MLS listings, and has become a very divisive issue in the industry. Pennsylvania Broker, Erica Ramus opined that Zillow is responding to a market demand, and highlighted the upside of the new release.
But Ramus is not in the majority (perhaps the growing minority, but currently takes an unpopular position). The National Association of Realtors (NAR) responded to Zillow’s announcement with a complete guide outlining the legalities surrounding “coming soon” listings, positioning these types of listings as being “withheld” from the MLS.
When to take a “coming soon” listing
In a statement, NAR asserts that there is a right and wrong way to take a “coming soon” listing.
“The first important step in advising a seller-client on whether to advertise a property as ‘coming soon’ is to identify the client’s best interests, as defined by that client,” said National Association of Realtors® General Counsel Katie Johnson. “Failing to act in the client’s best interest and failing to disclose the pros and cons of a limited marketing plan, such as ‘coming soon’ advertising, can violate state real estate license laws and regulations, MLS policies, and the Realtor® Code of Ethics.”
Johnson adds that “It’s important that sellers understand the implications of various ways of marketing the property so that they can knowingly determine the choice that best serves their interests. If a broker determines that “coming soon” advertising is in the client’s best interest and confirms that the client understands the possible consequences, then it is imperative for the broker to know the real estate license laws and regulations of their state to ensure that such advertising is in compliance. A broker who fails to comply with state laws and regulations risks facing disciplinary action from licensing authorities, as well as the possibility of litigation from unsatisfied clients.”
State laws vary
State license laws vary, NAR notes, pointing out that an angry seller could claim a broker failed to obtain the highest possible price by excluding it from the MLS, and the client may not have understood that “the marketing of the property might not achieve the highest price.”
NAR points to Colorado’s recent “CP-44 Commission Position on Coming Soon Listings” which clarifies that a licensee’s existing duty to “promote the interests of the seller or landlord with the utmost good faith, loyalty, and fidelity” which requires Colorado licensees to advise clients during the negotiation of the listing contract of the benefits or risks of limiting a property’s exposure through “coming soon” advertising. The broker’s motivation for such limited exposure of the property must be for the seller’s benefit – not the licensee. The Commission Position concludes by requiring licensees to describe in the listing contract the marketing plan agreed upon by the broker and seller prior to any marketing being performed.
In South Carolina, advertising a property as “coming soon” before entering into a listing agreement with the seller violates South Carolina license law.
By pointing out Colorado and South Carolina, NAR tells its members that at all times, they must ensure that their advertising complies with local MLS rules.
And of course, the Code of Ethics
NAR urges members to consider the Code of Ethics when advising clients on whether or not to market properties as “coming soon.”
“Realtors® must remember to promote and protect the interest of the clients, present a true picture in their advertising, marketing, and other representations, and make property available to other brokers for showing to prospective purchasers when it is in the best interest of the seller,” said Johnson. Failing to do so harms the reputation of the broker and Realtors® generally and may result in disciplinary action from the broker’s local association of Realtors®.
Where is Realtor.com in all of this?
Realtor.com, operated by Move, Inc. has mostly stayed out of the fray, but Suzanne Roy, Industry Outreach at Move, Inc. tells Realuoso, “Move is closely following the discussion among professionals in organized real estate about how ‘pocket listings,’ or so-called ‘pre-market’ listings, effect consumers and the industry.”
So what’s next?
Although not a new debate, it has come to a head as Zillow puts their stamp on the issue, and the NAR has responded strongly, and Move, Inc. is quiet but is certainly not ignoring the argument.
Agents and brokers will consider their individual positions and local and state associations are taking on the debate, but mostly behind closed doors. Watch for groups like the Austin Board of Realtors to make decisions regarding how pre-MLS listings may or may not appear in the MLS, and what rules surround these types of listings.